Tag Archives: crisis
Proposals published on improvements for buyer and seller protection in Scotland
The Law Society of Scotland has published a report following an independent review of consumer protections for people buying and selling property in Scotland. The review, by former Sheriff Principal Edward Bowen, examined the current consumer protections in place as well as conveyancing practice and the existing legal framework. It followed high profile and complex cases in Aberdeenshire and West Lothian where clients were left without proper title to land bought through residential property transactions. The Law Society provides a number of consumer protections for people using Scottish solicitors. This includes its Guarantee Fund, a fund of last resort which seeks to compensate clients who are the victims of a solicitor’s dishonesty. The Society also arranges for the Master Policy, a single policy of professional indemnity insurance, to ensure firms are covered for cases involving negligence. Bowen concluded that the cases in Aberdeen and West Lothian arose for very different reasons and were highly complex and unusual, and did not suggest a fundamental problem with conveyancing practice. His report makes a number of recommendations, including consideration of the widening of the scope of the Guarantee Fund, and a possible change to the name of the fund to avoid confusion. Some changes would be likely to require changes to the legislation governing the fund. It also recommends amending the guidelines for discretionary powers for the Guarantee Fund to provide discretionary assistance in restricting continuing losses in certain circumstances and the possible introduction of a new system of protection for purchasers of newly constructed houses to protect from insolvency. This would have to be brought forward by Scottish Ministers. ‘We have an important duty to protect the interests of the consumers of legal services, a responsibility which we take extremely seriously. The vast majority of Scottish solicitors provide an excellent service for their clients, but we need to ensure that we have a robust set of consumer protections to help clients in those very few occasions when things go wrong,’ said president of the Law Society of Scotland, Alistair Morris. ‘These difficult and very complicated conveyancing cases in West Lothian and Aberdeenshire left some questioning if the existing protections are sufficient. That is why we commissioned an independent review to look at the issues arising from these cases, current conveyancing practice and existing Scots law, to see what lessons can be learned for the future,’ he explained. ‘Overall, the report provides reassurance that there are no fundamental or underlying problems with Scots property law and solicitors’ conveyancing practice. It is notable that Sheriff Principal Bowen has concluded that the cases in Aberdeen and West Lothian arose for very different reasons and were highly complex and unusual,’ he added. He also pointed out that these findings are reassuring for both the legal profession and members of the public who rely on the knowledge and expertise of their solicitor when buying a new home. ‘We fully appreciate however, that it does not provide much comfort for the people… Continue reading
Annual savings of £742 for those getting on the UK housing ladder
First time buyers in the UK are £742 or 9% a year better off with their own home compared to those who rent, according to new research by the Halifax. The average monthly buying cost, including mortgage payments, associated with a first time buyer buying a three bedroom house stood at £658 in December 2014, some £62 lower than the typical monthly rent of £720 paid on the same property type. With the price of a typical first time buyer home rising by 8% in 2014, the difference has narrowed from £80 or 12% to £62 since 2013 as the average monthly buying costs grew by £46 while average monthly rents increased by £28. However, at the same time, the number of first-time buyers increased by an estimated 22% in 2014, with 326,500 first time buyers getting on the ladder, the highest annual total since 2007 when it was 359,900. In 2014, first time buyers in London had, in cash terms, experienced the largest benefit from buying rather than renting a home. The average monthly cost of £1,275 for those who have bought compares to an average monthly rental price of £1,387, a saving of £112 a month or £1,338 over the year. The second largest difference is found in the North West where first time buyers were paying 17% less a month, £109 a month or £1,304 annually, than the typical private tenant in the region. The smallest differences between the monthly cost of buying and renting are in the East Midlands at £6 or 1%, and the South East at £15 or 2%. The research shows that the gap between cost of buying and renting still substantially higher than in 2009. Five years ago the average monthly cost of buying was £15 higher than the typical rent paid at £576 versus £561. Since 2009 the substantial improvement in the affordability of buying relative to renting largely reflects a 28% or £159 rise in average monthly rental costs over the past five years. This increase was twice as fast as the 14% or £83 rise in average monthly buying costs. ‘Average home buying costs are significantly lower than average rental costs, providing first-time buyers with a large financial saving if they can get on the housing ladder,’ said Craig McKinlay, Halifax mortgage director. ‘While the timescales associated with raising a sufficient deposit to buy a home present a hurdle to many potential first time buyers, the significant difference in costs between buying and renting, combined with still low mortgage rates, increased consumer confidence and the Help to Buy scheme, have all been factors driving the substantial rise in first-time buyers over the past two years,’ he added. Continue reading
Increasing demand and lack of supply hitting UK first time buyer market
The UK housing market is seeing increasing demand and limited supply and first time buyers are finding it increasingly difficult to get on the property market, according to a new analysis. Since 1980, there has been considerable fluctuation in the UK housing market and while house prices have been increasing, home ownership among younger age groups generally has declined. The analysis from the Office of National Statistics also shows that if the number of households in England grows to 24.3 million in 2021 as projected, this would be equivalent to an additional 221,000 households per year. Housing is therefore likely to remain an important topic in the future. Overall, the UK housing market comprises 27.8 million residential properties, the report says. Linked to income, wealth and availability of lending, the housing market is sensitive to the overall economic climate. On average house prices have increased by 6.9% per year since 1980 and the greatest annual increase in house prices was 25.6% in 1988. In 2013, the average price (mix adjusted) of a property in the UK stood at £242,000. There were seven years between 1980 and 2013 where, on average, UK house prices fell, the majority of which occurred during the recession of the early 1990s. The biggest drop, however, was 7.6% in 2009. The economic downturn in 2008 had a considerable impact on the UK housing market. The decline in house prices was accompanied by reduced mortgage availability and stricter lending criteria, and this is a major reason in the UK for the continuing low level of housing transactions. The number of property sales in the UK almost halved from a peak of 1.67 million in 2006 to 0.86 million in 2009. Since 2009, however, the number of sales has partially recovered, increasing to 1.07 million in 2013. The report points out that rising house prices could partially explain the decline in the number of first time buyers taking out a mortgage. Between 1980 and 2002, the number of mortgages agreed for first time buyers was averaging around 486,000 per year. However, in 2003 there was a 31% decline in the number of mortgages for first time buyers from 2002. It also shows that in 2008 saw a further 47% decrease from 2007 as the effects of the economic downturn impacted on the housing market. While some recovery in the numbers of first time buyers has been apparent in 2013/2014, the level remains below the average seen prior to 2003. The report says that the reduction in the numbers of first time buyers has subsequently had an impact on the age of home owners. In 1991, 67% of the 25 to 34 age group were home owners. By 2011/2012, this had declined to 43%. There were also reductions in home ownership over the same period for the 16 to 24 age group from 36% to 10% and for the 35 to 44 age group from 78% to 64%. By contrast, home ownership has increased among… Continue reading
